International Mail
Federal Register: August 19, 2009 (Volume 74, Number 159)
Rules and Regulations
Page 41791-41794
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DOCID:fr19au09-4
POSTAL REGULATORY COMMISSION 39 CFR Part 3020
Docket No. CP2009-49; Order No. 268
International Mail
AGENCY: Postal Regulatory Commission.
ACTION: Final rule.
SUMMARY: The Commission is making changes to the Competitive Product
List, including adding a Global Plus 2 contract. This is consistent with changes in a recent law governing postal operations. Republication of the lists of market dominant and competitive products is also consistent with requirements in the new law.
DATES: Effective August 19, 2009 and is applicable beginning July 31, 2009.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman at 202-789-6820 or stephen.sharfman@prc.gov.
SUPPLEMENTARY INFORMATION: Regulatory History, 74 FR 35898 (July 21, 2009).
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Introduction
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Background
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Comments
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Commission Analysis
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Ordering Paragraphs
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Introduction
The Postal Service proposes to add a specific Global Plus 2 contract to the Global Plus Contract product established in Docket No.
MC2008-7. For the reasons discussed below, the Commission approves the
Postal Service's proposal.
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Background
On July 13, 2009, the Postal Service filed a notice, pursuant to 39
CFR 3015.5, announcing that it has entered into two additional Global
Plus 2 contracts, which it states fit within the previously established
Global Plus 2 Contracts product.\1\ The Postal Service states that each contract is functionally equivalent to previously submitted Global Plus 2 contracts, are filed in accordance with Order No. 112 \2\ and are supported by Governors' Decision No. 08-10 filed in Docket No. MC2008- 7.\3\ Notice at 1.
\1\ Notice of the United States Postal Service of Filing Two
Functionally Equivalent Global Plus 2 Negotiated Service Agreements,
July 13, 2009 (Notice). While the Notice was filed jointly in Docket
Nos. CP2009-48 and CP2009-49, the Commission will address the issues in these dockets in separate orders. The Postal Service requests that the two contracts be included in the Global Plus 2 product, and
``that they be considered the new `baseline' contracts for future functional equivalency analyses....'' Id. at 2.
\2\ See Docket Nos. MC2008-7, CP2008-16 and CP2008-17, Order
Concerning Global Plus 2 Negotiated Service Agreements, October 3, 2008 (Order No. 112).
\3\ See Docket Nos. MC2008-7, CP2008-16 and CP2008-17, Decision of the Governors of the United States Postal Service on the
Establishment of Prices and Classification for Global Direct, Global
Bulk Economy, and Global Plus Contracts, July 16, 2008 (Governors'
Decision 08-10).
The Notice also states that in Docket No. MC2008-7, the Governors established prices and classifications for competitive products not of general applicability for Global Plus Contracts. The Postal Service relates that the instant contract is the immediate successor contract to the contract in Docket No. CP2008-17, which will expire soon, and which the Commission found to be functionally equivalent in Order No. 112.
The Postal Service contends that the instant contract should be included within the Global Plus 2 product on the Competitive Product
List. Id.
In support, the Postal Service has filed a redacted version of the contract and related materials as Attachment 1-A. A redacted version of the certified statement required by 39 CFR 3015.5 is included as
Attachment 2-A. The Postal Service states that the contract should be included within the Global Plus 2 product and requests that the instant contract be considered the ``baseline contract[s] for future functional equivalency analyses concerning this product.'' Id. at 2.
The Postal Service filed the instant contract pursuant to 39 CFR 3015.5. The contract becomes effective August 1, 2009, unless regulatory reviews affect that date, and have a one-year term.
The Postal Service maintains that certain portions of each contract and certified statement required by 39 CFR 3015.5(c)(2), containing names and identifying information of the Global Plus 2 customer, related financial information, portions of the certified statement which contain costs and pricing as well as the accompanying analyses that provide prices, terms, conditions, and financial projections should remain under seal. Id. at 3.
The Postal Service asserts the contract is functionally equivalent with the contract filed in Docket No. CP2009-49 because they share similar cost and market characteristics. It contends that they should be classified as a single product. Id. It states that while the existing contracts filed in Docket Nos.
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CP2008-16 and CP2008-17 exhibited minor distinctions, the new contracts are identical to one another. Id. at 4.
The instant contract is with the same Postal Qualified Wholesalers
(PQW) as in Docket No. CP2008-17. Even though some terms and conditions of the contract have changed, the Postal Service states that the essence of the service to the PQW customers is offering price-based incentives to commit large amounts of mail volume or postage revenue for Global Bulk Economy (GBE) and Global Direct (GD).\4\
\4\ The Postal Service states the commitments also account for
International Priority Airmail (IPA), International Surface Air Lift
(ISAL), Express Mail International (EMI), and Priority Mail
International (PMI) items mailed under a separate but related Global
Plus 1 contract with each customer. The Global Plus 1 contracts are the subject of a separate competitive products proceeding.
The Postal Service indicates that the instant contract has material differences which include removal of retroactivity provisions; explanations of price modification as a result of currency rate fluctuations or postal administration fees; removal of language on enforcement of mailing requirements; and restructuring of price incentives, commitments, penalties and clarification of continuing contractual obligations in the event of termination.
The Postal Service maintains these differences only add detail or amplify processes included in prior Global Plus 2 contracts. It contends because the instant contract has the same cost attributes and methodology as well as similar cost and market characteristics, the differences do not affect the fundamental service being offered or the essential structure of the contract. Id. at 8. Therefore, it asserts these contracts are ``functionally equivalent in all pertinent respects.'' Id. at 8.
In Order No. 250, the Commission gave notice of the filing, appointed a Public Representative, and provided the public with an opportunity to comment.\5\
\5\ Notice of Filing of Two Functionally Equivalent Global Plus 2 Negotiated Service Agreements, July 16, 2009 (Order No. 250).
On July 23, 2009, Chairman's Information Request No. 1 (CHIR No. 1) was issued with responses due by July 28, 2009. On July 28, 2009, the
Postal Service provided its responses to CHIR No. 1.
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Comments
Comments were filed by the Public Representative.\6\ No other interested parties submitted comments. The Public Representative states the contract appears to satisfy the statutory criteria, but because he believes there are ambiguities in the cost methodology, his response is not an unqualified recommendation in support of the contract's approval. Id. at 2. He notes that relevant provisions of 39 U.S.C. 3632, 3633 and 3642 appear to be met by these additional Global Plus 2 contracts. Id. The Public Representative states that he believes the contracts are functionally equivalent to the existing Global Plus
Contracts product. He also determines that the Postal Service has provided greater transparency and accessibility in its filings. Id. at 3.
\6\ Public Representative Comments in Response to Order No. 250,
July 23, 2009 (Public Representative Comments).
The Public Representative notes that the general public benefits from the availability of these contracts in several ways: Well prepared international mail adds increased efficiency in the mailstream, enhanced volume results in timeliness in outbound shipments to all countries including those with small volume, and the addition of shipping options may result in expansion of mail volumes, particularly with the incentives for PQWs to promote the use of outbound international shipping resulting in expansion of these services for the
Postal Service. Id. at 4.
Finally, he discusses the need for self-contained docket filings.
In particular, he notes that the instant contract relies on data from the most recent International Cost and Revenue Analysis (ICRA), which was filed in another docket. He suggest that the Postal Service identify the location of the ICRA utilized and cited in that docket.
Id. at 6.
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Commission Analysis
The Postal Service proposes to add an additional contract under the
Global Plus Contracts product that was created in Docket No. MC2008-7.
As filed, this docket presents two issues for the Commission to consider: (1) Whether the contract satisfies 39 U.S.C. 3633, and (2) whether the contract is functionally equivalent to previously reviewed
Global Plus 2 contracts. In reaching its conclusions, the Commission has reviewed the Notice, the contract and the financial analyses provided under seal, supplemental information, and the Public
Representative's comments.
Statutory requirements. The Postal Service contends that the instant contract and supporting documents filed in this docket establish compliance with the statutory provisions applicable to rates for competitive products (39 U.S.C. 3633). Notice at 2.
J. Ron Poland, Manager, Statistical Programs, Finance Department asserts Governors' Decision No. 08-10 for Global Plus Contracts establishes price floor and ceiling formulas issued on July 16, 2008.
He certifies that the pricing in the instant contract meets the
Governors' pricing formula and meets the criteria of 39 U.S.C. 3633(a)(1), (2) and (3). He further states that the prices demonstrate that the contract and the included ancillary services should cover their attributable costs, preclude the subsidization of competitive products by market dominant products, and should not impair the ability of competitive products on the whole to cover an appropriate share of institutional costs. Notice, Attachment 2-A.
For his part, the Public Representative indicates that the contract appears to satisfy 39 U.S.C. 3633. Public Representative Comments at 1- 3.
Based on the data submitted, including the supplemental information, the Commission finds that the contract should cover its attributable costs (39 U.S.C. 3633(a)(2)), should not lead to the subsidization of competitive products by market dominant products (39
U.S.C. 3633(a)(1)), and should have a positive effect on competitive products' contribution to institutional costs (39 U.S.C. 3633(a)(3)).
Thus, an initial review of the contract indicates that it comports with the provisions applicable to rates for competitive products.
Functional equivalence. The Postal Service asserts that the instant contract is functionally equivalent to the contract filed in the companion proceeding, Docket No. CP2009-49, as well as with Global Plus 2 contracts filed previously because they share similar cost and market characteristics. Notice at 4. The Postal Service states that the customers under the existing and proposed contracts are the same. In addition, it notes that existing contracts exhibited some differences, the contracts proposed in Docket Nos. CP2009-48 and CP2009-49 are identical. Id.
Having reviewed the contracts filed in the instant proceeding and in Docket No. CP2009-49, and the Postal Service's justification, the
Commission finds that the two contracts may be treated as functionally equivalent.
New baseline. The Postal Service requests that the contracts filed in Docket Nos. CP2009-48 and 2009-49 be included in the Global Plus 2 product and ``considered the new `baseline' contracts for purposes of future functional equivalency analyses concerning this product.'' Id. at 2. Currently, the Global Plus 2 product consists of two existing contracts that will be superseded by the contracts in Docket Nos.
CP2009-48 and CP2009-49.
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Under those circumstances, the new contracts need not be designated as a new product. Accordingly, the new contracts in Docket Nos. CP2009-48 and CP2009-49 will be included in the Global Plus 2 product and become the ``baseline'' for future functional equivalency analyses regarding that product.
Other considerations. If the agreement terminates earlier than anticipated, the Postal Service shall promptly inform the Commission of the new termination date.
In conclusion, the Commission finds that the negotiated service agreement submitted in Docket No. CP2009-49 is appropriately included within the Global Plus 2 product.
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Ordering Paragraphs
It is ordered: 1. The contract filed in Docket No. CP2009-49 is included within the Global Plus 2 product (MC2008-7 and CP2009-49). 2. The existing Global Plus 2 product (MC2008-7, CP2008-16 and
CP2008-17) is removed from the product list. 3. As discussed in the body of this order, future contract filings which rely on materials filed under seal in other dockets should be self contained. 4. The Postal Service shall notify the Commission if the termination date changes as discussed in this order.
List of Subjects in 39 CFR Part 3020
Administrative practice and procedure; Postal Service.
Issued: July 31, 2009.
By the Commission.
Judith M. Grady,
Acting Secretary. 0
For the reasons stated in the preamble, under the authority at 39
U.S.C. 503, the Postal Regulatory Commission amends 39 CFR part 3020 as follows:
PART 3020--PRODUCT LISTS 0 1. The authority citation for part 3020 continues to read as follows:
Authority: 39 U.S.C. 503; 3622; 3631; 3642; 3682. 0 2. Revise Appendix A to Subpart A of Part 3020--Mail Classification
Schedule to read as follows:
Appendix to Subpart A of Part 3020--Mail Classification Schedule
Part A--Market Dominant Products 1000 Market Dominant Product List
First-Class Mail
Single-Piece Letters/Postcards
Bulk Letters/Postcards
Flats
Parcels
Outbound Single-Piece First-Class Mail International
Inbound Single-Piece First-Class Mail International
Standard Mail (Regular and Nonprofit)
High Density and Saturation Letters
High Density and Saturation Flats/Parcels
Carrier Route
Letters
Flats
Not Flat-Machinables (NFMs)/Parcels
Periodicals
Within County Periodicals
Outside County Periodicals
Package Services
Single-Piece Parcel Post
Inbound Surface Parcel Post (at UPU rates)
Bound Printed Matter Flats
Bound Printed Matter Parcels
Media Mail/Library Mail
Special Services
Ancillary Services
International Ancillary Services
Address List Services
Caller Service
Change-of-Address Credit Card Authentication
Confirm
International Reply Coupon Service
International Business Reply Mail Service
Money Orders
Post Office Box Service
Negotiated Service Agreements
HSBC North America Holdings Inc. Negotiated Service Agreement
Bookspan Negotiated Service Agreement
Bank of America corporation Negotiated Service Agreement
The Bradford Group Negotiated Service Agreement
Inbound International
Canada Post--United States Postal Service Contractual Bilateral
Agreement for Inbound Market Dominant Services
Market Dominant Product Descriptions
First-Class Mail
Reserved for Class Description
Single-Piece Letters/Postcards
Reserved for Product Description
Bulk Letters/Postcards
Reserved for Product Description
Flats
Reserved for Product Description
Parcels
Reserved for Product Description
Outbound Single-Piece First-Class Mail International
Reserved for Product Description
Inbound Single-Piece First-Class Mail International
Reserved for Product Description
Standard Mail (Regular and Nonprofit)
Reserved for Class Description
High Density and Saturation Letters
Reserved for Product Description
High Density and Saturation Flats/Parcels
Reserved for Product Description
Carrier Route
Reserved for Product Description
Letters
Reserved for Product Description
Flats
Reserved for Product Description
Not Flat-Machinables (NFMs)/Parcels
Reserved for Product Description
Periodicals
Reserved for Class Description
Within County Periodicals
Reserved for Product Description
Outside County Periodicals
Reserved for Product Description
Package Services
Reserved for Class Description
Single-Piece Parcel Post
Reserved for Product Description
Inbound Surface Parcel Post (at UPU rates)
Reserved for Product Description
Bound Printed Matter Flats
Reserved for Product Description
Bound Printed Matter Parcels
Reserved for Product Description
Media Mail/Library Mail
Reserved for Product Description
Special Services
Reserved for Class Description
Ancillary Services
Reserved for Product Description
Address Correction Service
Reserved for Product Description
Applications and Mailing Permits
Reserved for Product Description
Business Reply Mail
Reserved for Product Description
Bulk Parcel Return Service
Reserved for Product Description
Certified Mail
Reserved for Product Description
Certificate of Mailing
Reserved for Product Description
Collect on Delivery
Reserved for Product Description
Delivery Confirmation
Reserved for Product Description
Insurance
Reserved for Product Description
Merchandise Return Service
Reserved for Product Description
Parcel Airlift (PAL)
Reserved for Product Description
Registered Mail
Reserved for Product Description
Return Receipt
Reserved for Product Description
Return Receipt for Merchandise
Reserved for Product Description
Restricted Delivery
Reserved for Product Description
Shipper-Paid Forwarding
Reserved for Product Description
Signature Confirmation
Reserved for Product Description
Special Handling
Reserved for Product Description
Stamped Envelopes
Reserved for Product Description
Stamped Cards
Reserved for Product Description
Premium Stamped Stationery
Reserved for Product Description
Premium Stamped Cards
Reserved for Product Description
International Ancillary Services
Reserved for Product Description
International Certificate of Mailing
Reserved for Product Description
International Registered Mail
Reserved for Product Description
International Return Receipt
Reserved for Product Description
International Restricted Delivery
Reserved for Product Description
Address List Services
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Reserved for Product Description
Caller Service
Reserved for Product Description
Change-of-Address Credit Card Authentication
Reserved for Product Description
Confirm
Reserved for Product Description
International Reply Coupon Service
Reserved for Product Description
International Business Reply Mail Service
Reserved for Product Description
Money Orders
Reserved for Product Description
Post Office Box Service
Reserved for Product Description
Negotiated Service Agreements
Reserved for Class Description
HSBC North America Holdings Inc. Negotiated Service Agreement
Reserved for Product Description
Bookspan Negotiated Service Agreement
Reserved for Product Description
Bank of America Corporation Negotiated Service Agreement
The Bradford Group Negotiated Service Agreement
Part B--Competitive Products 2000 Competitive Product List
Express Mail
Express Mail
Outbound International Expedited Services
Inbound International Expedited Services
Inbound International Expedited Services 1 (CP2008-7)
Inbound International Expedited Services 2 (MC2009-10 and
CP2009-12)
Priority Mail
Priority Mail
Outbound Priority Mail International
Inbound Air Parcel Post
Royal Mail Group Inbound Air Parcel Post Agreement
Parcel Select
Parcel Return Service
International
International Priority Airlift (IPA)
International Surface Airlift (ISAL)
International Direct Sacks--M-Bags
Global Customized Shipping Services
Inbound Surface Parcel Post (at non-UPU rates)
Canada Post--United States Postal Service Contractual Bilateral
Agreement for Inbound Competitive Services (MC2009-8 and CP2009-9)
International Money Transfer Service
International Ancillary Services
Special Services
Premium Forwarding Service
Negotiated Service Agreements
Domestic
Express Mail Contract 1 (MC2008-5)
Express Mail Contract 2 (MC2009-3 and CP2009-4)
Express Mail Contract 3 (MC2009-15 and CP2009-21)
Express Mail Contract 4 (MC2009-34 and CP2009-45)
Express Mail & Priority Mail Contract 1 (MC2009-6 and CP2009-7)
Express Mail & Priority Mail Contract 2 (MC2009-12 and CP2009- 14)
Express Mail & Priority Mail Contract 3 (MC2009-13 and CP2009- 17)
Express Mail & Priority Mail Contract 4 (MC2009-17 and CP2009- 24)
Express Mail & Priority Mail Contract 5 (MC2009-18 and CP2009- 25)
Express Mail & Priority Mail Contract 6 (MC2009-31 and CP2009- 42)
Express Mail & Priority Mail Contract 7 (MC2009-32 and CP2009- 43)
Express Mail & Priority Mail Contract 8 (MC2009-33 and CP2009- 44)
Parcel Return Service Contract 1 (MC2009-1 and CP2009-2)
Priority Mail Contract 1 (MC2008-8 and CP2008-26)
Priority Mail Contract 2 (MC2009-2 and CP2009-3)
Priority Mail Contract 3 (MC2009-4 and CP2009-5)
Priority Mail Contract 4 (MC2009-5 and CP2009-6)
Priority Mail Contract 5 (MC2009-21 and CP2009-26)
Priority Mail Contract 6 (MC2009-25 and CP2009-30)
Priority Mail Contract 7 (MC2009-25 and CP2009-31)
Priority Mail Contract 8 (MC2009-25 and CP2009-32)
Priority Mail Contract 9 (MC2009-25 and CP2009-33)
Priority Mail Contract 10 (MC2009-25 and CP2009-34)
Priority Mail Contract 11 (MC2009-27 and CP2009-37)
Priority Mail Contract 12 (MC2009-28 and CP2009-38)
Priority Mail Contract 13 (MC2009-29 and CP2009-39)
Priority Mail Contract 14 (MC2009-30 and CP2009-40)
Outbound International
Direct Entry Parcels Contracts
Direct Entry Parcels 1 (MC2009-26 and CP2009-36)
Global Direct Contracts (MC2009-9, CP2009-10, and CP2009-11)
Global Expedited Package Services (GEPS) Contracts
GEPS 1 (CP2008-5, CP2008-11, CP2008-12, and CP2008-13, CP2008- 18, CP2008-19, CP2008-20, CP2008-21, CP2008-22, CP2008-23, and
CP2008-24)
Global Plus Contracts
Global Plus 1 (CP2008-8, CP2008-46 and CP2009-47)
Global Plus 2 (MC2008-7, CP2009-48 and CP2009-49)
Inbound International
Inbound Direct Entry Contracts with Foreign Postal
Administrations (MC2008-6, CP2008-14 and CP2008-15)
International Business Reply Service Competitive Contract 1
(MC2009-14 and CP2009-20)
FR Doc. E9-19855 Filed 8-18-09; 8:45 am
BILLING CODE 7710-FW-P
